Ministry of Finance: Indonesia’s Manufacturing Performance Can Be Maintained Amid Increasing Global Risks

Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance Febrio Kacaribu. (Photo: Doc. Antara)

JAKARTA - Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Kacaribu, said that Indonesia's manufacturing performance is still maintained amidst increasing global risks.

This is reflected in Indonesia's manufacturing Purchasing Managers' Index (PMI) in October which was at the level of 51.5, indicating consecutive manufacturing expansion over the last 26 months.

"In the midst of global turmoil, activity in the Indonesian manufacturing sector is still consistently expansive. The expansion of Indonesian manufacturing is mainly supported by the level of demand and production output which is still increasing," said Febrio in Jakarta, quoted from Antara, Thursday 2 November.

Febrio agrees that Indonesia's manufacturing performance has shown a slowdown in the last two months in line with slowing global growth. Manufacturing PMI in August was at 53.9 and September at 52.3.

Despite weakening, Indonesia's manufacturing PMI is still in the expansion zone above 50.0. Meanwhile, many countries recorded manufacturing PMI in the contraction zone due to the global economic slowdown, such as China (49.5), Thailand (47.5), Vietnam (49.6), Malaysia (46.8), Australia (48, 2), and the European zone (43).

It was also stated that India is one of the economies in the emerging economies (EMs) group and Indonesia's potential export market is still in the expansionary zone (55.5).

Febrio is optimistic that manufacturing performance, which is still expansive, shows the resilience of the Indonesian economy amidst contracting manufacturing in many countries along with increasing global risks.

"Even though it has slowed slightly, overall sentiment in the Indonesian manufacturing sector is still positive. We will continue to maintain this achievement through various policy supports to maintain economic stability and anticipate global risks," said Febrio.

S&P Global noted that the Indonesian Manufacturing Purchasing Managers' Index (PMI) in October 2021 weakened to 51.5 because it was influenced by production performance.

In line with the S&P Global report, manufacturing conditions in Indonesia based on the Industrial Confidence Index (IKI) in October 2023 released by the Ministry of Industry also show a slowdown.

Even though it is still at the expansion level with a achievement of 50.70, he said, there was a slowdown from the figure of 52.51 in September 2023.